The GST Council has proposed a 28% GST on Casino & Online Gaming on the full value of bet as against the winning amount, this is in stark contrast with global practice and could be a serious blow to the entire industry.

It is unlikely that this is done to boast tax collection, rather the real motive could be to discourage the activity altogether, essentially making it a sin tax.

The industry is calling it death blow and being fairly vocal about it. Over the last decade, billions of dollars have been pumped in startups operating in fantasy sports, real money and skill based gaming, besides Goa’s economy massively depends on tourism for whom Casino is the key attraction. Accordingly, there is a possibility this can be rolled back or made less unfavourable for the industry. However, policy reversal if any is purely speculative in nature and we have no basis to stay invested until there is any clarity on this.

We were seeing meaningful triggers in sight for Delta Corp which is why we were willing ride further despite price moving up multi-fold from our initial buying price of 80s back in 2020. The near term trigger was IPO of their online gaming and launch of the new ship which was going to double the overall capacity of live casino, while the medium-long term trigger was Delta’s new integrated entertainment zone next to Goa’s new airport (which is already operational).

Both near term triggers may not play out favourably in the light of this sudden, totally unexpected and extremely negative development, while starving the company for incremental cash/capital required to meet Rs 3,000 Cr capex on the new entertainment zone.

We did not release the exit notification earlier in the day, as stock was locked in down circuit with no buyers. Since then over 6.5 Cr shares have been traded and the price too has recovered from the lows of Rs 176 to 193 (at the time of publishing this update).

To be fair and conservative in our record keeping, we are assuming an exit price of Rs 190, 1.50% below the current price.

Note
- It’s been a while we had kept this stock on hold to avoid entry at elevated levels by new subscribers and also further additions by old subscribers.
- Also, keeping in mind the associated risks, we had kept the allocation at lowest level in line with our strong risk management framework.